This is the third National Government Budget Implementation Review Report for FY 2017/18. It covers the period from July 2017 to March 2018. The Controller of Budget prepares the report in line with Article 228 of the Constitution of Kenya 2010 and Section 9 of the Controller of Budget Act, 2016.
Both laws require the Controller of Budget to submit to Parliament quarterly budget implementation reports for the National and County Governments every four months.
The report presents the progress made in implementing the National Government budget in the first nine months of FY 2017/18. It gives information on receipts into the Consolidated Fund (revenue), withdrawals, and expenditure performance.
The Controller of Budget (COB) analyses the expenditure by development and recurrent expenditure categories, and by Sector. The COB disaggregates the expenditure further by Ministries, Departments and Agencies (MDAs). The COB also compares the expenditure against performance in the similar period of FY 2016/17 (July 2016 to March 2017).
The Controller of Budget also identifies the key challenges that affected budget implementation during the period and makes appropriate recommendations.
The report’s data comes from the approved budget, financial reports from MDAs and expenditure reports from the Integrated Financial Management Information System (IFMIS).
A financial year in Kenya runs from 1st July of the current year to 30th June of the coming year. A financial year is a period the government uses for accounting and budgeting purposes, and for financial reporting.
The report is important in providing regular information on budget implementation to legislators, policymakers, the public, development partners, and other stakeholders. It provides information that is useful in decision making on key issues that affect budget implementation.
See Also: The Budget Process in Kenya
In this article, we shall look at the summary of the report. A link to download the full report is available at the end of the post.
Money Received into the Consolidated Fund
During the first nine months of FY 2017/18, receipts (revenue, loans, etc.) into the Consolidated Fund amounted to KSh1.5 trillion. This represents 70.7 per cent of the revised annual target of KSh2.1 trillion. This translates to a 13 per cent growth compared to KSh1.3 trillion received in a similar period of FY 2016/17.
The national government should deposit all the money raised or received on its behalf into the Consolidated Fund (Article 206 of Kenyan Constitution), except money that-
- is reasonably excluded from the Fund by an Act of Parliament and payable into another public fund established for a specific purpose; or
- may, under an Act of Parliament, be retained by the State organ that received it for the purpose of defraying the expenses of the State organ.
Total exchequer issues
Exchequer issues refer to the money disbursed to the national government MDAs and the County Governments (equitable share of revenue).
Total exchequer issues to MDAs, Consolidated Funds Service (CFS), and County Governments amounted to KSh1.4 trillion. This represents 64 per cent of the revised net estimates.
The exchequer issues comprised of:
- KSh646.7 billion for MDAs’ recurrent expenditure,
- KSh192.9 billion for development expenditure,
- KSh356.3 billion towards CFS, and
- KSh174.5 billion to County Governments.
Recurrent expenditure covers items like personal emoluments (salaries, allowances, etc.), and operation and maintenance cost. Consolidated Fund Services covers items like debt repayment and pension.
Total expenditure by government MDAs and CFS
Gross expenditure by the MDAs and CFS amounted to KSh1.3 trillion, representing 60.2 per cent of the revised gross estimates. This is an increase compared to 56.9 per cent recorded in a similar period of FY 2016/17.
The expenditure comprised of KSh1.04 trillion for recurrent activities and KSh282.6 billion for development programmes.
Recurrent expenditure consisted of:
- KSh702.5 billion incurred by the MDAs, representing 66.8 per cent of the revised gross recurrent estimates. This is a 16.6 per cent growth from KSh602.4 billion (65.6 per cent) recorded in a similar period of FY 2016/17, and
- KSh339.3 billion on Consolidated Fund Services (CFS). The CFS expenditure was 62.4 per cent of the revised estimates, an increase compared to 61.9 per cent recorded in a similar period of FY 2016/17.
Expenditure by economic classification
Analysis of the MDA’s recurrent expenditure by major economic items shows that most expenditure related to; Personnel Emoluments (PE), Current Transfers to Semi-Autonomous Government Agencies (SAGAs), Rentals and Rates for Non-residential, Travelling and Hospitality.
The Personnel Emoluments category (excluding National Intelligence Service, Ministry of Defence and Ethics and Anti-corruption Commission) incurred the highest expenditure at KSh277.9 billion. This represents 39.6 per cent of the total MDAs recurrent expenditure.
The Teachers Service Commission (TSC) reported the highest expenditure on personal emoluments (PE) at KSh162 billion. This translated to 58.3 per cent of the total PE expenditure by the MDAs.
The second highest spending economic item was Current transfers to SAGAs at Kshs.273 billion. This represents 38.9 per cent of the total recurrent expenditure.
Rentals and rates for non-residential buildings recorded the third highest expenditure at KSh10 billion, representing 1.4 per cent of the total recurrent expenditure by MDAs.
The gross development expenditure amounted to KSh282.6 billion, representing an absorption rate of 46.7 per cent. This is an increase compared to 45.1 per cent recorded in a similar period FY 2016/17.
Absorption rate is the amount of money the government actually manages to spend in a certain period out of the total allocation for that year.
Analysis of expenditure by major economic items indicates that the highest expenditure category was Capital transfers to SAGAs at KSh166.9 billion.
It was followed by Construction and civil works at KSh31.4 billion per cent and refurbishment of buildings/infrastructure at KSh27.3 billion.
This represents 59.1 per cent, 11.1 per cent and 9.7 per cent of the gross development expenditure respectively.
Challenges and recommendations
During the period under review budget implementation faced a number of challenges. These included;
- delay by MDAs to submit quarterly financial reports to the Controller of Budget,
- failure to align budget reallocation to actual performance,
- low absorption of development expenditure budget, and
- failure to report on programme and project achievements by MDAs.
The Controller of Budget recommends that all responsible Accounting Officers should ensure timely submission of expenditure reports.
They should also ensure the reports have sufficient information on programme and project achievements as set out in the Programme Based Budget framework.
Finally, all MDAs affected by budget rationalization should liaise with National Treasury to allocate funds against overdrawn items in the subsequent supplementary budget.
To read more about how the national government spent your money in the first half of FY 2017/18, download The National Government Budget Implementation Report 3rd Quarter of FY 2017/18 (17 downloads) .
You can also read about how the national government spent your money in the 1st half of FY 2017/18.